My Daily Wear

Conventional solventborne lacquers for wood baseball bats appear to be “striking out” in favor of compliant waterborne lacquers. Last year, Hillerich & Bradsby (H&B), manufacturer of the famed “Louisville Slugger,” switched from a conventional solventborne lacquer to a waterborne lacquer for its wood bats. Thus far, the coating appears to be “batting 1000.”

Switching to a waterborne lacquer has benefited H&B in several ways. The solvent content is less than a conventional lacquer, which reduces volatile organic compound (VOC) emissions. Other advantages of low solvent content include enhanced worker safety and decreased flammability.

According to Dave Marcum, wood bats plant manager, superior overall coating properties featured heavily in the decision to switch to the waterborne lacquer. One excellent property of the waterborne lacquer is the sheen or the “build” it puts on the bat. The company explains that the sheen is not really a gloss and is not measured with a glossmeter. Yet the sheen is very important to the appearance of the finished bat.

In testing the sheen, H&B discovered another outstanding property of the coating. Lab technicians ran a 96-hr water-soak test on the coated bats. After the test, the bats exhibited no sheen, but after one day, the sheen returned. This test demonstrated that the water resistance of the coating is very good. Other properties include excellent hardness, the absence of air bubbles when agitated and the tendency not to yellow.

Previously, the bats needed three coats: a filler, a sealer and a topcoat. Now the waterborne lacquer is applied in a single coat and achieves the same build and sheen exhibited by the conventional lacquer.

The finishing process

The wood bats are produced at a plant at Jeffersonville, IN, across the river from Louisville. The adult softball bats go through a rough and fine machine sanding at a speed of about 22 bats per min. They are then dipped manually into a tank of waterborne lacquer. The coating is a modified acrylic emulsion from Fischer Industrial Coatings (Westchester, OH). The coatings are applied at a wet-film thickness of 1.75 to 2 mils.

After being dipped, the bats are hung by the knob on a conveyor. They move down the line for about 45 min to air dry. Water is sprayed underneath to prevent sagging and coating buildup at the barrel end. Circulating air fans are placed under the conveyor line to speed the drying time. At the end of 40 min, the finish is cured sufficiently for the bats to be stacked without sticking to each other. After total cure, which occurs overnight, the coating has a pencil hardness of about 4H.

Clear and black are the most popular coatings. Red and blue are applied in small quantities for special applications. For logo printing, three methods are used: burn or foil branding prior to dipping; and silk screening after dipping.

The company does not take special precautions to control humidity and temperature in the plant. When humidity appears to affect the coating, a slip agent is added to enhance lubricity. “We were quite concerned about the switch to waterborne lacquer at first,” says George Manning, vice-president, technical services, H&B. “We were pleasantly surprised that the humidity and temperature did not need to be controlled. We had experimented with several waterborne lacquers and had problems with them. The Fischer waterborne lacquer has not presented any problems thus far. We have to make slight modifications to the coating to prevent `blush’ (moisture in the cured film) in high humidity. But those additives seem to be easily controlled.”

The waterborne lacquer has been used for about a year. The coating uses an ethylene glycol monopropyl ether (EP) solvent at 5.91% by weight to disperse the resin. EP is considered a “medium-slow” evaporating solvent, having a relative evaporation rate of 2.22 (n-butyl acetate=1), according to ASTM D 3539.

The coalescing solvent is ethylene glycol monobutyl ether, which is 0.01% by weight. Its relative evaporation rate is 0.07. This slow-evaporating solvent allows coalescing of the resin particles into a continuous coating film after the water has evaporated. The total solvent content of the lacquer is about 1 to 1.75 lb/gal; the VOC of the previously used solventborne lacquer was 5.5 lb/gal.

Larry’s Shoes 1995 sales of 300,000 pairs is a complete turnabout from its underperformance in 1990. Its president, Elliot Goodwin, worked at becoming the highest volume independent men’s shoe retailer in the US by setting up focus groups of men’s shoe buyers in his area. After the results of the changes made. Aside from its exhibits, espresso/cappuccino bar and television, Larry’s also attracts customers with its thank-you cards, catalogs and 30-day Walk Test Guarantee.

Larry Shoes uses a wide range of basic direct marketing techniques, including the ever-popular guarantee. But theirs is different.

At first glance, you think you’ve walked into a shoe museum. Look, over there, under glass, Judy Garland’s lace-up oxfords. And, nearby, Rita Hayworth’s dancing shoes: brocaded platform ankle straps. Walk a little further and you’ll see Clark Gable’s tan suede wing tips from one of his movies, President Ford’s golf shoes, President Kennedy’s wing tips, and the telephone shoe used by Don Adams on the old Get Smart TV series.

Finding each of these exhibits required time, research, and money (Marilyn Monroe’s suede pumps cost $6,300).

Now, walk over to the espresso/cappuccino bar. Your choice of complimentary coffees while you browse among the store’s main purpose: selling you shoes.

Welcome to Larry’s Shoes, America’s largest shoe store for men.

Larry’s sell shoes, as shoe stores do. But where else can you find:

* A licensed physical therapist who is a foot masseuse and gives complimentary massages in the store on Saturday and holidays.

* Free shoe shines on Saturday and holidays (or drop them off to be shined and picked up on Saturday.)

* A selection of more than 30,000 pairs of men’s brooks shoes for plantar fasciitis in 2,000 styles in sizes 6 to 18 from 60 manufacturers, displayed and housed in a 15,000-square-foot setting (picture an area nearly one fourth the size of a football field.).

This means an inventory worth more than $1 million or ten times the stock in the average shoe store.

* And, more than 650,000 names on its mailing list!

Now that’s impressive.

But first, a little background…

Owner Elliot Goodwin’s dad, Larry, started the business in 1949. He had a pawn shop in Fort Worth, Texas. When a local men’s shop went out of business, he bought the shoe inventory. Only later did he find out he had a lot of sizes rarely found in shoe stores – up to size 18.

What seemed to be a huge problem became a huge niche – a men’s shoe store with hard-to-find big size mens shoes for bunions to folks who wore big sizes. One of the immediate prospects: athletes. Soon the Dallas Cowboys were steady customers. And, in a little more than 10 years, annual volume grew to nearly half a million dollars.

The basic concepts the father preached, the son practiced. Why not? He started working in the store when he was 10 years old and, when faced with the choice between college and retailing, he choose retailing following his father’s basic precepts for success:

Precept #2. Customers know and appreciate brands. Larry’s has individual shoe brands in their own shops within Larry’s: The Timberland shoe area looks like the inside of a miner’s cabin in Antarctica. The Bostonian section has Greek columns and porticos gracing the entrance to a marble-floored sophisticated shoe selection.

Precept #3. The competition was originally a few independents and a department store or two. This changed almost overnight. Nordstrom arrived nationally with a known shoe selection and pricing reputation. Then came the chains: Foot Locker, Payless, and other category killers. Next: the catalog companies suggested the customer stay at home and buy shoes through the mail. And then there appeared something called Home Shopping Network selling jewelry, clothing and, yes, shoes for people with high arches that said don’t use the malls, order through TV.

Precept #4. When a new employee joins Larry’s, they first go through 64 hours of training with films, literature, and stockroom time before they can go out on the floor and start selling. Dallas store manager Carl Wicks says, “Did you know that seven out of ten men are wearing the wrong shoe size? We want to make sure that doesn’t happen at Larry’s.” Knowledge of stock is still a basic tool for good selling.

This look, theme, and feeling began only five years ago, when president Elliot Goodwin saw his business in seven stores no longer posting anticipated annual increases. Wondering what he was doing wrong, he came upon the realization that he was simply not listening to his customers.

How did he find this out? He set up focus groups of men’s shoe buyers in his area (not necessarily his own customers) and quickly received several shocks:

Many felt the store was expensive when, in fact, they discounted regular retail prices from 10 percent to 20 percent.

Some thought they also sold women’s shoes.

And, most of all, Elliot discovered that even though he loved the shoe business, “Most people thought shopping for shoes was a pain.”

Hmmmmmmm, not much different than what dad suggested many years ago. But somewhere, somehow, the message wasn’t being delivered to the customer. One solution: direct mail. Larry’s database has the customer’s name, address, and demographics ranging from what styles the customer buys, their sizes, when bought, and what brands.

This meant Larry’s could not only adjust inventories to what-the-customer-wanted but also easily fill mail orders from their customers’ database. Now they could also offer gifts for the wife/girlfriend who would call or come in for a gift.

They do not take their huge mailing list and send everything to everybody. Their biggest catalog only goes to half the list. The next catalog mailing also goes to half – but the half-not-previously-mailed.

All mailings are not this giant-sized. Each employee has business cards, thank you notes, birthday cards to mail to their customers (yes, Larry’s pays the postage). The company feels thank-you cards to every customer are mandatory. And use the lists of your personal customers to let them know of a sale before anyone else knows. And how about when new styles come in from a brand the customer likes. Shouldn’t the customer be told. Oh, yes….

Larry’s uses other basic direct marketing techniques, including the ever-popular Guarantee. But theirs is different. Not simply the “take it home and if you’re not happy, bring it back” guarantee. Theirs is a 30-day Walk Test Guarantee emphasized in big posters in the store. Here’s what it says:

“Larry’s (provides) a free 30 day walk test. Wear Larry’s shoes for 30 days and if you are not completely satisfied, for any reason, return them for another pair, a gift certificate or a full refund.”

Has to give you confidence this is THE place to buy your shoes.

But any store needs new names to add to its list. Larry’s solution: cable and spot TV. They pick and choose stations that appeal to men: CNN, ESPN. “The idea of TV is to attract new customers,” says advertising director Kim Todora.”

A recent survey taken across the United States said, “people who enjoy shopping will spend 20 percent more.” Larry’s wants that excitement for their customers and its recent sales show their new directions are working. Best proof: sales of more than 300,000 pairs of shoes last year, making Larry’s the highest volume independent men’s shoe retailer in the country.

While Pilates exercises are great for strengthening your core muscles, the method’s holistic approach also delivers a balanced total-body workout that pays off with amazing results. “The beauty of Pilates is that it’s such an integrated program, you feel every movement, everywhere,” says Stott Pilates Master Trainer John Garey, M.A. To pump up and round out the 15 Minutes to a Bikini Body workout (on the preceding poster), Garey recommends adding these three upper-body exercises for shapelier arms, sexier shoulders and a stronger back. Stay focused on stabilizing the torso and pelvis through each of these moves and follow the four “Pilates Form Pointers” found on the poster, and you’ll not only be ready to bare it all in a bikini, but you’ll look strong and sculpted in just about any sleeveless style the weather demands.

DIRECTIONS

Do these exercises at least 2 or 3 times a week as part of a regular total-body Pilates program and/or your regular workout plan. If performed alone, warm up first with large, slow arm circles, wrist circles and figure eights, followed by 6-8 push-ups on a wall. To finish, stretch each muscle group worked, holding each stretch without bouncing for 8-10 seconds.

Sit erect, legs extended in front of you, slightly bent if necessary. Place flex band around balls of your feet; gently point toes to hold band in place, one end in each hand. Extend arms toward feet, palms up, upper arms parallel to each other. Contract abs to maintain position without rounding upper back or tucking tailbone under; visualize shoulder blades sliding down your back [A]. Inhale to prepare; maintain arm and shoulder position and bend elbows, bringing knuckles toward sky [B]. Inhale and return to start position.

Repeat for 8-10 reps.

Pilates Push-Up

Stand erect, feet together. Roll torso down toward mat, knees slightly bent or straight, placing hands on mat slightly more than shoulder-width apart [A]. Walk hands forward until shoulders align over wrists and body is in a plank position in a straight line from head to ankles [B]. Inhale for 3 pulse counts as you release body down toward the mat, pending elbows in a push-up position [C]. Press back up to push-up start position in one exhale, walk hands toward feet and roll up.

Hong Kong watch producers are now a dominant industry force, with a big stake in the U.S. market. Innovation, education and acquisition have helped them outgrow their image of low-end imitators and challenge established Swiss and Japanese competitors. But there could be trouble ahead

Pssst! Wanna buy a Hong Kong watch? That’s a foolish question. Whether you know it or not, you probably do own one, or at least a watch with parts made in Hong Kong.

In less than 20 years, Hong Kong watchmakers have changed from an enclave making cheap knockoffs into a world-class industry. They produce components and assemble them for well-known labels in Europe and America. They own prestigious Swiss brands. They’re major buyers of Swiss and Japanese movements. And they’re already cultivating two of the next century’s most importantwatch markets: China and the European Economic Community.

Hong Kong supposedly has one unchanging characteristic: that it’s always changing. So, too, is itswatch industry. The following reports depict an industry at a critical stage, facing problems involving design quality, an acute labor shortage, rising costs and the pending return of China’s sovereignty. To survive, the industry must continue to change.

One is the Monkey King, a delightful storybook character known to every Chinese child. A seemingly comical figure at first, the Monkey King always defeats his opponents with shrewdness, agility and surprising strength.

Like the Monkey King, Hong Kong watchmakers repeatedly confound their critics. Twenty years ago, a handful of small firms made 3 million watches a year in a city a third the size of Long Island, N.Y. At the most recent count, 1,300 companies have 27,000 workers making 438 million watches, clocksand components each year. Operations are in Hong Kong and China.

Today, Hong Kong watchmakers can aspire to the other symbol: the stone lions, seen everywhere from bank entrances to curio shop shelves, the ancient symbols of the supreme power of the Chinese.

If not kings of the watch world, Hong Kong watchmakers vie with the Swiss and the Japanese for the title, and like those imperial lions, they seem to be everywhere.

Since 1978, they’ve been the world’s largest exporter of watches by volume and, since 1987, the second largest (after Japan) in terms of value. Last year, that value increased 24%, to $2.1 billion, up from $1.7 billion in 1987. (Note: All monetary figures in this report are in U.S. dollars, not Hong Kong dollars.)

Indeed, Hong Kong components are part of so many watches that Fred W. Bopp, vice president of international operations for Gruen Marketing, speaks of “an international” watch, combining products of Japan, Hong Kong and Switzerland. “Swiss and Japanese buy cases and watch bracelets in Hong Kong, and dials here, in Taiwan and in Thailand,” says Bopp, also managing director of the firm’s new watch production operation in Hong Kong. “So, more watches have the same contents.”

On its own turf, the watch trade has become one of the lions of Hong Kong’s economy. It’s the third largest industry in the colony (after clothing and electronics) and one of the strongest.

Exports overall have slowed recently, but watches and clocks continue to show what the Hong Kong Trade Development Council calls “robust performance.” Indeed, many major watch firms reported exceptional growth in 1988. Asia Commercial, a big manufacturer of private-label watches, doubled annual profits to $7 million on sales of $136 million, increased quartz analog exports 80% and set up additional production lines to meet demand. Stelux Holdings, an international conglomerate and probably Hong Kong’s best-known watchmaker, reported a record turnover of $78 million and a record net profit of $28 million. Turnover in the watch division specifically grew 31%.

The strong performance is partly due to the continuing flexibility of Hong Kong’s watch trade (most of the 1,300 firms have fewer than 50 workers) and continuing improvement in production and quality control at major firms (about 200 firms with 75% of the trade’s employees).

Another factor: the weak U.S. dollar (to which Hong Kong currency is pegged) keeps prices competitive. Several firms say that in the past two years, they’ve gotten more orders that would have gone to Switzerland and Japan if those countries’ currencies weren’t so strong.

But much of the growth has been fueled by the steady improvement – in type, quality and value – of Hong Kong watches since 1986.

Going upmarket: The cheap digitals on which Hong Kong built its reputation in the 1970s and early ’80s represent a rapidly shriveling segment of total output. Worldwide exports of digital watches from Hong Kong have dropped 33% since 1985, from 250.6 million to 169.2 million in 1988 (through November, the most recent figures available at press time).

Meanwhile, quartz analog watch exports grew 116%, from 52.7 million to 114.1 million units. Last year’s tally alone was 48% higher than 1987’s.

In the U.S. market – Hong Kong’s largest – digitals dropped 37% from 1986 to 1988, from 93.6 million to 59.4 million. Quartz analog imports grew 83%, from 29.3 million to 53.5 million.

As quartz analog output has grown, so has quality. In the past three years, many manufacturers have moved firmly into better-priced watches ($50 to $200 at retail). Consider Gordon C & Co. Ltd., one of Hong Kong’s fastest-growing upscale firms. The firm produces watches retailing for $100-$500 for its U.S. and European customers and assembles its own movements in Switzerland. Gordon Chow, owner and general manager, plans to start producing his own line of 18k gold watches within two years. A few firms already produce jewel-encrusted timepieces, complete with luxury-level price tags.

The upgrade is due partly to the watchmakers’ remarkable ability to respond quickly – often within a few months or weeks – to changes in consumer demand.

“Hong Kong factories adapt very fast to market fluctuations,” says Jamson T.N. Wong, the watchfederation chairman. “If someone says, `Analog is good,’ almost everyone moves to analogs. If you say `Digitals are good,’ people will move back to digital.”

Sophisticated fashion and multifunction watches are popular now, so they dominate Hong Kong’s output. “In general, people want design-oriented products rather than ordinary, simple ones,” says Roger H.S. Tsui, president of the Hong Kong Watch Manufacturers Association and managing director of Remex Holdings Ltd., which produces more than 12 million quartz analog watches a year.

But much of the improvement in product is spurred by one simple economic fact: Hong Kong watchmakers as a whole can’t afford to stay in the price basement any longer. They remember how price-cutting and cut-throat competition undermined the boom in cheap LCD (liquid crystal display) tissot prc 200 watches in the early 1980s. And they know the same thing can happen with cheap quartz analogs because of a new round of price-cutting and competition from watch industries in Thailand, Malaysia, South Korea and Taiwan.

`High costs’: The biggest goads prodding Hong Kong into a higher-priced market, however, are sharply rising operating costs (last year the inflation rate hit 9%) and an acute labor shortage.

The city is an expensive place to live and work. `Things aren’t very cheap any more,” says Charles A. DuBois, Far East manager of the Swiss Watch Industry Information Center in Hong Kong and a resident since the mid-1970s. “I’m surprised they can still produce cheap watches in such quantity with the high rents [charged now in Hong Kong].”

The cost of imported watch parts has risen steadily in the past couple of years, especially movements (15% to 25% of the cost of a Hong Kong watch), most of which are bought from Japan and Switzerland. The use of better materials (i.e., metals instead of plastic) has added to production costs.

But it is labor costs – about 68% of a Hong Kong firm’s operating costs, excluding purchases of materials and industrial services – that have soared most, due to Hong Kong’s strong economy, rising inflation and labor shortage. In 1987, for example, wages for workers at the Hong Kong plant of watchmaker Seiko Instruments Electronics rose 14%, says the Japan Economic Journal. Today, per capita wages in Hong Kong average $9,600 (U.S.), the highest in Asia.

“Our labor isn’t cheap any more, so we have to go for the higher price [watches],” says Samson Sun, permanent honorary president of the Federation of Hong Kong Watch Trades & Industries. “Hong Kong manufacturers overall can’t survive selling watches for $2 or $3 each. We have to go into medium label analog quartz, in the $8-$40 range.”

Labor shortage: Soaring wages have made it difficult for Hong Kong factories to hold onto workers, who often follow the rising wage rate from plant to plant, even if the wage raise is only 20 cents.

Such labor volatility aggravates what most watchmakers, and other manufacturers, say has become Hong Kong’s biggest problem in the past two years: an acute shortage of skilled workers, especially for hands-on jobs such as assembling watches.

The city also must deal with a “brain drain” of professional managers and executives. But it is the shortage of skilled workers – Hong Kong’s official unemployment rate is only 1.9% – which has hit the city’s labor intensive industries, including watches, the hardest.

The annual turnover in employees at Remex, for example, is 40%. “Our personnel department has a very tough job,” says Philip Chan, one of the firm’s directors. “We try everything [to hold onto them, including] incentive plans, cash bonuses, piped-in music [in the work area], recreational activities, a TV in the changing room [where employees put on slippers, white coats and hats before entering to reduce dust in the assembly area], to watch programs at lunch break.”

Like many other watchmakers, Remex employs mainly young women, who are prized for their sharp eyes and nimble fingers. But most are single and leave to have children after they marry.

Even so, Remex’s situation isn’t as bad as that of some other Hong Kong manufacturers. A recent Hong Kong manpower survey of all city industries found some firms with annual turnovers of 100%!

Because of the labor shortage, many Hong Kong watchmakers have been unable to increase their production capacity, says Roger Tsui, president of the watch manufacturers’ association. It has become very hard, for instance, to find skilled makers of watch cases and watch bands. Indeed, the shortage became so acute a year ago that for awhile, many Hong Kong watchmakers simply stopped taking orders they couldn’t fill.

CHINA BECKONS

Rising costs and labor shortages have taken the edge off Hong Kong’s price competitiveness. But Hong Kong manufacturers have a handy remedy that others only dream of: abundant, inexpensive labor at their back door in the 1 billion-plus residents of the People’s Republic of China (PRC). As a result, some industry experts estimate that up to half of Hong Kong’s larger watchmakers, like other Hong Kong manufacturers, have set up factories or moved their operations to the PRC. There they can “take advantage of the more reliable labor situation,” as Nh Chue Meng, chairman of Stelux Holdings, puts it.

Nearby Guandong and Fujian provinces alone boasted 390 watch and clock factories by the end of 1988, according to published reports. Most are located in the PRC’s “free economic zones” in the Pearl River Delta, within 20 miles of Hong Kong. Business there has boomed in the past few years as Hong Kong wages soared and its labor supply dwindled.

Most of the city’s major watchmakers, such as Stelux and Asia Commercial, have major manufacturing operations in the PRC. But sent back to Hong Kong for finishing and assembly. The digitals, especially, are high-quantity, minimum-skill, labor-intensive products well suited to the current level of watchmaking skills of workers in the PRC’s economic zones.

But production of quartz analog watches in the PRC is increasing, as the skill level of the workers there rises. Industry analysts expect further significant increases over the next few years. Asia Commercial, for example, recently opened two new three-story plants, with a total of 180,000 sq. ft., the first of several on a 450,000-sq.-ft. site. The plants will manufacture watch bands and produce up to 5 million quartz analog watches ($10 each, factory cost, over $40 retail).

Industry analysts say China is the key to Hong Kong’s continued price competitiveness in watches and akribos watches review. “With the labor supply, and the cheap overhead we can get from China, I think the Hong Kong watch industry faces an even brighter future than before,” says Jamson N. T. Wong, chairman of the Federation of Hong Kong Trades & Industries.

The shift of more labor-intensive operations to China will continue, but few industry analysts expect all of Hong Kong’s watch trade to move to China.

“The majority of production will remain in Hong Kong. Low-end products will switch to the PRC and Thailand, but quartz analog and the mid-level products will continue to be assembled in Hong Kong,” says Roger Tsui, managing director of Remex Holdings.

On quality, watchmakers both within and outside the city’s industry contend that Hong Kong watches are the equal (or very close to it) of Swiss and Japanese watches at comparable price levels. Most of the city’s large firms keep close control over production and employ stringent quality control procedures.

For example, Remex, which produces 12 million watches annually and is one of the city’s few movement manufacturers, has quality control checks on every unit at each stage of production, plus random sample evaluation. Components must meet precise specifications; quartz analog movements, for instance, are rejected if their accuracy varies more than a half second, plus or minus, per day.

In addition, more big firms now use state-of-the-art quality testing equipment (usually from Japan and/or Switzerland) to monitor all specifications, including water-proof testing of assembled watches, reading stuhrling watches review and checking the gold plating of cases.

Automation also plays an increasingly important role. Several big firms have added semi-automated assembly lines to meet growing production demands, and use computer-aided design programs.

(Full scale automation, as found in Japan, is unlikely soon, however. Many Hong Kong watchmakers say that would deprive the labor-intensive industry of its flexibility and ability to provide short-notice custom orders in which the trade specializes.)

Smaller firms are improving the quality of their production, too, with help from the Hong Kong Productivity Council. The HKPC’s metals division provides consultants and laboratory services to help small manufacturers improve surface finishing of watch cases and bands, and to produce tiny parts such as watch hands by metal stamping and photochemical machining. It also provides diagnostic and testing services.

In addition, this year the Hong Kong Vocational Training Council plans to set up a sheet-metal processing training center to train technicians in the fabrication of high precision watch movement parts.

Upgrading design: But the jury is still out on whether Hong Kong can upgrade the reputation and innovation of its watch designs as effectively as it has other aspects of its trade.

A number of individual Hong Kong watch executives are as familiar with the elements of good watch design as any in Neuchatel or Tokyo. C.P. Wong, managing director of Stelux, literally grew up in the Swiss watch trade. Roger Tsui, managing director of Remex, is a graduate of Swiss watchmaking schools.

But overall, Hong Kong has been a follower, not a leader, in watch styling. The digitals on which Hong Kong built its watch industry between 1974 and 1982 didn’t really require any design originality. And for those and other watches, Hong Kong firms made what clients demanded, or copied whatever was successful on the market.

The nadir came in the mid-’80s, when several Swiss watchmakers accused some 50 Hong Kong firms of copyright infringement. Though the defendants said they followed generic fashion trends and most of the cases were dismissed, the incident was sobering for the entire Hong Kong watch industry.

“It alerted us that we should be creating our own styles here instead of copying or imitating them from somewhere else,” says Samson Sun, permanent honorary president of the Federation of Hong Kong Watch Trades & Industries. To date, however, none of Hong Kong’s schools has a program in practical watch design.

Creating designers: So, in the past four years, the Hong Kong watch trade has taken steps to train home-grown designers and to upgrade its design standards and quality.

More companies now send their designers to foreign trade shows to keep them abreast of trends in fashion, watches and jewelry, and to local seminars sponsored by industry associations to upgrade their skills. Several have in-house programs, or underwrite special training overseas. Managers and salespeople are encouraged to provide input and information on styling trends.

The Hong Kong Watch Manufacturers Association now has a short course of its own, and is talking with the Hong Kong Polytechnic School about adding watch design, says Roger Tsui, HKWMA president.

Another step is the annual Hong Kong Watch and Clock Design Competition, started in 1985 to encourage originality and innovation. It is sponsored by the HKWMA, the Hong Kong Federation of Watch Trades & Industries, and the Hong Kong Trade Development Council. Winners receive cash prizes and all-expenses paid trips to the international watch fair in Basel, Switzerland.

Designing for customers: To some extent, the effort is paying off. “The position of designer has become quite important in our industry” in just the past couple of years, says Roger Tsui.

Virtually all major watchmakers now have one or more fulltime designers on staff, usually native Hong Kong residents. Gordon C. & Co., a winner in last year’s design contest with its stainless and gold-plated multi-function moon phase watch, has four. Remex has three. Asia Commercial employs 10 designers and draftsmen.

Smaller firms which can’t afford full-time designers subcontract, and more designers are moonlighting. “Quite a lot of designers are selling their designs to manufacturers,” notes Tsui.

A measure of the extent to which Hong Kong firm have become style conscious is that fewer now wait for clients to come to them. Instead, “more and more watchmakers are creating their own watch designs and promoting them to their customers, who are importers or retailers in other countries,” says Warren W. L. Hui, managing director of Prosperity Watch Co., and chairman of the watch industry advisory committee of the Hong Kong Trade Development Council.

In addition, “More importers are coming to us and saying `Show us what [designs] you have,’ instead of saying `Make this,'” from their designs, he says. At Asia Commercial, a major private label manufacturer whose customers include Armitron, Pierre Cardin, Elgin, Sharp and Waltham, “50% are designed by us and 50% by the importers,” says Wu Sik Lan, deputy general manager. Out of 515 new models produced by Asia Commercial in 1987, for instance, about 300 were original in-house creations.

An ironic measure of the improved originality of Hong Kong designs is that in a few isolated instances their styles “influenced” designs of new watches from Japan and Switzerland.

“It shows Hong Kong designs are being noticed by watch manufacturers of the world. If Hong Kong has a good idea or good design, they don’t mind using it,” says Warren Hui.

Still, Hong Kong watch manufacturers have a way to go, say both industry analysts and spokesmen.

MANY ROADS TO NEW MARKETS

Recently, the Minister of Trade for Singapore urged a conference of southeast Asian countries with growing watch industries to imitate Japan and market their own brands of watches internationally.

That would seem a logical step for Hong Kong watchmakers, considering their position as the world’s largest producer of watches, their global contacts and the recent improvement in the quality and value of their timepieces.

Indeed, the same idea has occurred to some of them. Various watch firms have registered some 700 possible brand names in Government House in Hong Kong. A few larger firms already have brands which they promote in home and foreign markets. These include Asia Commercial’s Accord, Prosperity Watch’s Intima, and Stelux’s Swatch-like Smash.

Yet overall, Hong Kong watchmakers are reluctant to develop and promote their own new brands. Risk is a big reason. “To build up a name, you have to invest a lot in advertising, with no guarantee of success,” explains one privately.

Then too, admit some watchmakers, many people still associate “Hong Kong watches” with cheap knockoffs, an image which can be a detriment to sales. Certainly there’s little desire to build brand business in the U.S. Hong Kong is a major supplier of private label goods in this country and doesn’t want to rock its profitable boat.

“Hong Kong firms have very good and close connections with private brand name owners and importers in the U.S.,” says Jamson T. N. Wong, chairman of the Federation of Hong Kong Watch Trades & Industries. “They’re good customers. Why compete with them?”

So, rather than start new brands from scratch, major Hong Kong watchmakers are expanding their markets in other ways.

Several are taking what one laughingly called “the easy way” – acquiring well-established, usually Swiss, brand names, as a path into upscale markets.

Stelux Holdings is a leader in this. It acquired the Swiss brand Titus & Solvil in the 1970s, two Swiss watch case factories, a dial producer and also, Bulova (which it later sold in 1979). Late last year, it added Universal Geneve to its fold.

Other transactions in the past year include Asia Commercial’s purchase of Juvenia and International’s acquisition of Camry.

They aren’t the only ones with Swiss or other holdings. According to Stelux’s C.P. Wong, as many as 25 major Hong Kong firms may have full or partial ownership of upscale brands. But, he says, many don’t publicize that because of the negative impact it might have on those brands. As Wu Sik Lun, deputy general manager of Asia Commercial Co. Ltd., explains, “many people recognize Switzerland as the number one watchmaker in the world so any watches coming from there have more prestige, while Hong Kong timepieces are still treated as low-end watches.”

Asia Commercial illustrates why large Hong Kong watchmakers are buying established upscale brands and how they will use them. It already is a major producer of private label watches, with an international client list that includes Armitron, Pierre Cardin, Gitano, Quelle, Elgin, Sharp and Waltham. But selling only to importers, who own the brands, and only in low- to medium-price watches has its limits.

So, for the past couple of years, Asia Commercial has “been negotiating for…a number of well-known brand names to enhance its penetration of world markets and achieve a higher margin in sales of its products in these major marketplaces,” said Asia Commercial Chairman Eav Yin in a recent report to stockholders.

It was successful in acquiring Juvenia, a luxury Swiss brand established in 1860, from Ebel, another well-known Swiss firm, for some $3 million late last year.

Retailing watches: Another way of expanding one’s market is to sell direct to the public, bypassing the importer and wholesaler.

Stelux Holdings has added watch retailing to its assembly and manufacturing operations. In 1985, it cautiously opened its first watch stores in Hong Kong, under the name City Chain.

“It had a staggered start,” recalls Albert Gazeley, executive director of Stelux. “The first year, we weren’t sure whether we should stay in because it upset a lot of our customers. But Mr. [C.P.] Wong [Stelux’s managing director] decided to take the big step, because going direct to the customer was the way to go, to cut out the wholesaler and offer more competitive prices in the market.”

The watchmaker’s retail efforts had “a few lumps and bumps” as it experimented with a variety of retailing, including selling in store corners and under-the-stairs boutiques. When the chain’s sales started to grow quickly, “we reassessed our situation, kept what was working and settled on [using] higher class, better shops, with better styling and more established brands names.”

By late 1988, there were close to 60 stores in Hong Kong, plus eight in Singapore, 12 in Taiwan, and several in Malaysia. The stores’ exteriors are almost all glass windows; their interiors use mirrors and stainless steel, and look bigger than they actually are.

In his annual statement to shareholders, Ng Chue Meng, chairman of Stelux Holdings, reported that City Chain is “setting new sales records month by month and based on this consistent performance, we expect the retail watch division to be an important profit contributor…for the long term future.”

According to another Stelux report, Europe and the U.S. – possibly Hawaii – are “under consideration” as future sites of the watch store chain.

“We’ve had a number of people ask us about franchising in America, so we know we’re onto a good thing. But we’re not in a big rush [to do that] until we have everything here tied down,” says Gazeley.

For the next couple of years, at least, C.P. Wong told JC-K, Stelux will concentrate on building its presence in Europe and Far Eastern countries.

“For the time being we have no plans to enter the U.S. in any significant way, other than in making watch bands for famous watch companies and producing private labels for people there under OEM [original equipment manufacturer] agreements.”

One reason Hong watchmakers may be less anxious to develop new business in the U.S. may be that some of them now consider the European Economic Community (composed of 12 west European nations), southeast Asia and especially China to be more viable markets than the U.S.

“The U.S. market is slowing,” says Philip Chan, a director of Remex. “We think the buying power there is decreasing, and we are looking more to the European markets.”

THE SHADOW OF 1997

A tall, gleaming, blue glass tower has risen above Hong Kong’s skyline in recent months, literally overshadowing Hong Kong’s nearby Government House. It’s the new and imposing home of the Bank of China, operated by the People’s Republic of China (PRC), a symbol of China’s already-large influence in Hong Kong. It is also a constant visual reminder that this “most capitalist city in the free world” – as a western industry analyst calls it – will return to the PRC’s sovereignty in 1997.

Like that gleaming blue tower, the 1997 return looms over the thoughts of Hong Kong’s residents, as well as its business activities. “The shadow of 1997 covers everything,” says a leading Hong Kong watchmaker privately.

Publicly, businesspeople and government officials downplay concern. But June’s brutal massacre and crackdown by the PRC on students and workers calling for democratic reforms only increased the anxiety of Hong Kong businesses and residents about how a hard-line Chinese government could handle their city. The Hong Kong stock market plunged 40% between May and early June, exit visa requests rose sharply, and hundreds of thousands demonstrated in Hong Kong. Many of them called for renegotiation of the 1997 treaty.

“Let’s be frank,” a government official told JC-K. “Two-thirds of Hong Kong’s 5.6 million people are refugees [from China] who are all-too-familiar with what happens when things go wrong in the [PRC]. There is trepidation. It’s foolish to say people aren’t concerned how things will work out after 1997.”

Such suspicion is understandable, says Tony Miller, assistant director of the Hong Kong Department of Trade.

“The official relationship [between China and Hong Kong] has changed so fast that some people have trouble accepting that we now have a normal situation. Twenty years ago, there were bombs and riots [when Mao’s Cultural Revolution zealots stormed into Hong Kong]. Ten years ago, the situation was still extremely abnormal. High PRC officials coming through Hong Kong did so as quietly as possible, and we pretended they weren’t here.

“These days, though, when a senior PRC official comes through town, he goes to Government House for tea and talks with government ministers! It’s all quite natural.”

Brain drain: Many in Hong Kong aren’t so sure, and aren’t waiting to see what happens. There already is a serious “brain drain.” That’s what Hong Kong residents call the growing flow of professionals leaving the city for other countries since Great Britain agreed in 1985 to return Hong Kong to China. More than 45,000 people now leave annually – so many, in fact, that Emigrant, a new magazine just for them, has appeared on Hong Kong news stands.

Canada, Australia and New Zealand are popular destinations. They offer quick entry based on education, occupation, work experience, fluency in English and/or for “business immigrants,” those with sound business plans and sizable investment funds. The U.S., by contrast, uses quotas and requires family ties or skills in a scarce occupation.

City officials downplay the brain drain. They note that Hong Kong has a history of immigration (as South China’s transit point for refugees); that only half of those leaving are adults, and that many aren’t business or management professionals.

Even so, in a city which already has an acute labor shortage, loss of many managers and top-level personnel is serious. In one major watch corporation alone, 80% of the 60-plus executive officers have emigrated to Canada, Australia or the U.S. Many watch manufacturers who “want to expand and need management people find there aren’t enough to fill the vacancies,” says Roger Tsui, president of the Hong Kong Watch Manufacturers Association.

Returns: That’s the bad news. The good news is that the brain drain isn’t as damaging, yet, as it seems. The government is creating education programs and building a third university to train home-grown technicians and business professionals. Also, many migrating managers and execs return alone to their Hong Kong firms after they’ve settled their families in free, stable countries elsewhere and gotten second passports. “Getting residents’ rights or a second passport is insurance against the future [after 1997],” one watch company exec told JC-K.)

Meanwhile, in true Hong Kong style, many watchmakers are using this mini-diaspora to create new markets and foreign sales networks, and to get closer to sources of technical developments and fashion trends, says Jamson T. N. Wong, chairman the Federation of Hong Kong Watch Trades & Industries.

Formerly, “Hong Kong watchmakers were concentrated in Hong Kong. They didn’t move out [or] have offices overseas. Now, because of 1997, they have to emigrate somewhere. Wherever they go – the U.S., Canada, Australia and Europe – they set up offices, become marketing people and start networks of salesmen to prepare for after 1997,” he says.

In addition, frequent trips to and contacts with overseas offices and relatives keep them well informed on fashion trends and technological developments.

“Wherever something develops, Hong Kong people are there – family, wife, employee, someone – and they call immediately and say, `Someone here is doing something you should know about.

It’s in the newspaper,'” says Wong. All this “makes the Hong Kong watch industry more efficient in understanding and selling to the world market.”

Bulova Corp., one of the best-known names in watches and clocks in the U.S., has expanded into a new market: 14k gold jewelry.

The firm’s new Ultime jewelry collection is an extension of its Ultime 14k watch brand, introduced four years ago.

Company officials unveiled the line Jan. 14, saying it signals Bulova’s commitment to growth through expansion of services and products.

Year of introductions: The collections launches “a new phase in the revitalization of one of the great names in American products,” said Andrew H. Tisch, president of Bulova, which Loews Corp. acquired 10 years ago.

The jewelry is the first of several new products, most of them watches and clocks, which the 114-year-old firm is introducing this year. “Each meets a specific need in the marketplace and is on the cutting edge of our industry,” said Tisch.

In particular, the jewelry line stems from Bulova’s desire for a “synergistic product expansion” that allows a wider range of services to complement its timepiece products, said Herbert C. Hofmann, Bulova’s chief operating officer.

From the start, said Hofmann, Bulova decided any new products must be “high quality, durable, tastefully styled, and fill a void and service need in the marketplace, just as our Ultime watch did.”

After three years of bulova watches review, Bulova opted to develop the 14k gold jewelry line. The reasons, said Hofmann, included the limited amount of branded 14k merchandise available to jewelers, and problems jewelers have with some gold jewelry’s authenticity and supplier support.

Certificates: The Ultime collection is designed mainly in the U.S. and manufactured in Europe, the Far East and the U.S. It includes earrings, bangle bracelets, pendants and rings, totaling 350 units. Several are adorned with diamonds or other precious gems. Retail prices range from $125 to $4,500.

Each piece comes individually boxed, ready to sell, with a “Certificate of Quality” attesting to the gold authenticity. This is “increasingly important in light of the varying and sometimes misrepresented claims of purity in the marketplace today,” said Hofmann.

The collection will be available from Bulova’s sales force nationally by April. The minimum opening order is $500; minimum reorders are $100. Bulova has a toll-free number (800-443-0047) for jewelry orders.

The line is supported by Bulova’s national advertising program. Normally, the firm spends 15% of its sales dollars on ads. That rises to 20% this year for the launch of ultime jewelry. Bulovaalso is offering point-of-sale support, in-store displays, payment terms and co-op advertising.

“In short, we’re providing a total merchandising plan,” said Robert Ryan, Bulova’s vice president of marketing. “We’re taking the marketing techniques we use for our nixon watches and applying them to the jewelry market.”

Service-oriented: Bulova may be new to the jeweltry field, but its top officials believe ultime jewelry has several points in its favor.

One, they say, is Bulova’s name and reputation. “To the trade, we represent service, trust and quality,” said Ryan.

Another point is Bulova’s service, which Ryan called “our greatest strength.” In addition to support already mentioned, Bulova officials promised ample inventory, prompt delivery and a close relationship between sales representatives and jewelers. Bulova has increased its national sales force to more than 60 people (adding five) to handle jewelry demand and ensure all regions are covered. All have been trained in gold jewelry, how to present it and how to deal with customers’ needs and questions, the officials said.

One other selling point, said Hofmann, is Bulova’s commitment to quality. Every piece of jewelry is made from tool and die construction to “avert porosity and pitting from casting,” he said, and each is hand-polished. All diamond-accented pieces have one or more full-cut 1-Point diamonds. Earring and bar posts are 10% thicker than trade standards and double-grooved for added safety.

Though excited about the jewelry’s potential, officials wouldn’t estimate how many of Bulova’s 10,000 accounts will carry the line. But Tisch said pre-launch surveys found strong interest among jewelers.

The jewelry line isn’t an experiment, said Tisch. “I hope in a year to have a tremendous number of independent jewelers who’ll consider this one of their important (jewelry) lines,” he added.

It’s a look he created and has stuck to since he began showing collections eight seasons ago, and they were again on view this season.

The giant windowpane checks, rolled and cropped pants, and the unusal mix of textures he’s known for were all present in the spring ’85 collection. But the look gets a shot in the arm for spring with several short, kicky skirts, softer color combinations and a twist on his traditional layering.

For fall, Smith likes layer upon layer of heavy wools, wrapped head scarves and work boots – often referred to as the bag-lady look.

The look for spring, however, has a breezy attitude as seen in several buttondown skirts left unbuttoned and pinned to one side and worn over sassy shorts or cropped pants.

Camp shirts worn over T-shirts, walking shorts with boxy tops, and balloon-sized jumpsuits rolled to mid-calf are also Smith staples for spring. Since Smith believes in showing his collection in the ”proper environment,” fashion critics were treated to a ”sightseeing tour” where each segment of his collection was shown in elaborate theme dioramas.

The first part of the collection was called Sugar Cane and was set in an African field complete with a bongo-playing ”slave.” Here dancing cane workers wore cocoa striped jumpsuits, mustard and gray striped shorts, and ankle- length dusters, accessorized by straw cloche hats and swatches of burlap wrapped around their ankles.

The layering look was introduced with a cocoa and cream striped side button skirt that was pinned to the waist on one side, revealing white thigh-high shorts. It was worn with a matching cotton blouse, tied at the midriff. Another pinned skirt was worn over loose, cropped pants.

Next it was on to Metropolis, a set of windowpane checks in black shown in simple mini-shifts, pleated skirts and oversized jackets in a woven pattern that mixed stripes and small diamonds.

Sleeveless shirts sporting armholes that nearly reached the waist topped this set. These were great for those with a touch of exhibitionism in them but otherwise impractical.

Leaving Metropolis, it’s on to the country club which was complete with putting green and tea party and contained Smith’s nicest spring offerings.

The three L’s were especially evident in a four-piece ensemble that included a T-shirt worn under a midriff blouse and a pinned back side- button skirt worn over roll cuffed pants. Done in soft hues of robin’s egg blue and apricot, the outfit was worn with flat white shoes and anklets for a fanciful spring look.

Less exciting were the offerings in the Los Angeles and Punch and Judy segments of Smith’s show.

The first featured a wild and nearly indescribable print of lime, red, purple and black dots and dashes on a white backround. The print was used in bandeau tops worn with a palm tree print skirt and lilac jacket and again in a hip- wrapped kimono worn over white walking shorts and camp shirt top.

The Punch and Judy segment contained models made up like puppets and dressed in stark white bibbed jumpsuits, cropped pants and oversized shirts.

With the exception of a short, pleated skirt, oversized blouse and flowing raincoat – all in white – this segment was rather dull and uninspiring.

The Smith collection ranges from $40 for a camp shirt to $130 for a spring duster or raincoat.

Ern and their two children were looking forward to a relaxing beach holiday at Christmas. But when their luggage went astray on a Nordair flight to Miami, they had to go shopping instead.

“It was incredibly inconvenient,” says Mr. Ern, a psychology professor at the University of Guelph, who had to replace the whole family’s wardrobe at the height of the holiday season. “When we should have been out on the beach with the kids, we were waiting in line at Macy’s to buy underwear.” Since their missing bags weren’t found during the entire two-week holiday, the Erns not only had to buy new bathing suits, shoes and summer clothes, they also had to buy new suitcases to carry home their new possessions.

Two days after they returned to Guelph, they found out their baggage had turned up after all. Because of a handling error, it had been sitting in the Miami airport the whole time. “We’re terribly embarrassed about this,” said Marie Bernier, vice- president of public affairs for the Montreal-based airline.

Nine bags were misplaced on the same charter flight, which left Dec. 18, and six families including the Erns were left without their clothes and personal effects. “Their claims will receive special attention, I can tell you,” Miss Bernier added.

Now the experience is behind him, Mr. Ern wonders what rights airline passengers have when they’re left stranded without their bags for an extended period. “Is there any compensation for the inconvenience of having our holiday ruined?” he asks. “And what about waiting for reimbursement of my out-of-pocket expenses? I probably won’t see that money for a month or so.” To add to the hassles, Nordair did not have any ground staff at the Miami airport. Mr. Ern, desperate to know how much he could spend, made several long-distance calls (at his own expense) to airline staff in Toronto and Montreal.

For the first two days, he was told he could spend $25 per person per day to replace personal effects. Then by the fifth day, he was told he could spend $200 per person in total. “We wanted to get on with our holiday, but the airline was forcing us to shop every day,” Mr. Ern complains. “We were afraid to buy more because we didn’t know if we could get our money back.” During the holiday, Mr. Ern had to attend a special event for which he needed a sports jacket. He says he could not find out whether this expense – which exceeded his $200 personal luggage allowance – would be covered.

Miss Bernier said Nordair automatically pays $50 for the first 48 hours that luggage disappears. Expenses above this amount have to be claimed and substantiated with receipts after the passenger returns. “To allow $200 per passenger is quite unusual,” she said, “but this was a very unusual case.” Will there be any compensation for inconvenience? Mr. Ern says he spent three to four hours a day in crowded Miami stores at the height of the holiday rush, outfitting himself, his wife, 6-year-old Seth and 3-year-old Joshua. “This will be taken into consideration when we receive a claim,” she said. “But,” she added, “I must say it’s very hard to put a monetary value on frustration and inconvenience.” When bags are lost on an international flight, the airline’s maximum liability is about $400. (This is based on weight. You’re allowed to claim $9.07 per pound, up to 44 pounds per bag.) Miss Bernier said this $400 maximum also applied to mishandled luggage, as in the Erns’ case. Even if you spent more than $400 to re- place your belongings, you would not receive any more. That’s because whatever you bought on holiday, you could use afterward.

The Erns figure they spent about $1,000 for new clothes, as well as $140 for new luggage and $50 for long-distance calls. That doesn’t include the cost of gas and parking for all the shopping trips.

Mr. Ern now realizes he probably will get everything back, but he wishes Nordair officials had told him about the $400 liability limit when he was down south. “I guess the reason is they don’t want you to spend that much,” he says. “But while they’re trying to protect themselves, they’re ruining the holiday for the traveller.”

With the fitness movement accelerating and health club settings suitable for flaunting fashion flair, these companies are recognizing the significance of this ingredient to boost an industry in transition.

Participation in activities such as running and tennis is flat at best. However, the utility look of the clothes for these and other sports is getting a fashion updating, so that the wearer can comfortably shop or stop for a snack after a jog or a set or two of tennis.

Taken a step further, apparel designed specifically with multiple-purpose capabilities in mind, or cross training, is an area that is showing strong growth potential. With the help of Lycra spandex tights, for example, one can go from being fashionable on the street to the gym or hop on a bike.

Add to this sportswear and coverups, and you have a picture of the three big active shoe companies that once sold no-frills, utilitarian apparel solely in sporting goods shops trading up to department stores with an array of merchandise that smacks of sportswear trends.

Women, especially in their desire for flattering workout wear and swimsuits, already have a long jump on men in total spending for these categories. A Sporting Goods Manufacturers Association sales trend report indicated that female consumers outspent their male counterparts on overall sports apparel last year. Then, a staggering $3,030,000,000 was doled out, with 51.4 percent of the purchases made by females and 48.6 percent by men.

Each quarter, the North Palm Beach, Fla., organization conducts a survey of 10,000 households. Last year, $545,600,000 was spent on swimsuits, with 81 percent of those purchases made by females. Of the $154,200,000 spent on leotard and fitness apparel, excluding sweats, 94 percentcame from women’s wallets. Sweatsuits also fared well among women: Of the $271,400,000 spent on this item, 57.3 percent came from females.

Sebastian DiCasoli, director of marketing services for SGMA, said that for the first quarter ended March 31, females once again outspent men for active apparel. Of a combined total of $581 million spent for the quarter, $318 million, or 54.7 percent, came from women and $263 million, or 45.3 percent, was spent by men.

Adidas, a privately held company, projects 1987 women’s apparel volume at $35 million of its U.S. volume of $300 million. Although its men’s apparel business continues to lead women’s in volume, sales in the women’s area have increased 10 percent in the past 18 months, with combined sales of women’s and men’s apparel expected to jump 40 percent this year.

Worldwide last year, the company had $2,200,000,000 in activewear and footwear sales. Adidas expects a 5 percent drop in worldwide consolidated sales this year due to the decline in the value of the dollar and the weak French export market. However, total sales gains, including footwear, of about 25 percent each are expected in the United States and Japan for 1987.

Reebok has been on a roll, with a momentum that should help its drive in apparel. Overall sales in 1986 more than tripled to $919,401,000 and earnings did likewise, rising to $132,134,000. Its sales of women’s and men’s apparel were $39 million. This year, overall volume is expected to hit $1,300,000,000, with all apparel volume under the Reebok label at about $50 million. Women’s apparel alone is expected to account for $18 million.

Reebok’s commitment to apparel was further illustrated when it acquired Ellesse International SpA last month for $60 million in cash and notes. Ellesse, a privately held Italian company, manufactures and markets fashion skiwear, tennis apparel, sportswear, footwear and other apparel products. Its sales in 1986 were reported to be about $120 million, with sales of licensees estimated at more than $40 million.

Nike has hit some rough going but now appears to be perking up. In its fiscal year ended May 31, Nike’s overall volume fell 17.9 percent to $877,357,000, while earnings dropped 39.9 percent to $35,879,000. Apparel volume for Nike came to $130,700,000.

In the first quarter ended Aug. 31, however, revenues were up 10 percent to $282,828,000 and earnings climbed 67.9 percent to $25,081,000. First-quarter revenues from Nike’s apparel operation increased 5 percent to $36,783,000. Men’s continues to outpace women’s activewear, according toNike executives, but women’s, as at the other two shoe giants, is an area of increasing importance.

Of the three, Reebok is the latest entrant into the women’s apparel field–its first year anniversary will be marked with this year’s holiday shipping. Adidas, the most mature producer of women’s apparel, launched its first collection in 1975. Nike broke ground in the women’s apparel area in 1979.

Stanley Lanzet, a first vice president of research for Drexel Burnham Lambert, Inc., New York, said Reebok dominates about one-third of the domestic market, primarily in footwear sales. However, he is “pessimistic’ about this or any other active firm–Nike and Adidas included –dominating apparel the way Reebok has in footwear.

At the retail level, George Walker, vice president of sales promotion for Herman’s World of Sporting Goods, Carteret, N.J., said the 210-store chain does well with all three of the major active brands in functional apparel. Items in the collections run the gamut from sweats, fleece pieces and warmup suits to tennis and running attire.

“We sell quite a bit of each one,’ Walker insisted. “While Reebok continues to maintain a leadership role in footwear, Adidas and Nike are formidable opponents in apparel.’

He added that there’s been no decline in business for apparel made for active sports participation; it’s just not “accelerating as quickly as it did a couple of years ago.’

Douglas Arbetman, president of apparel at Reebok, said that, without a doubt, fashion is the most important feature for a women’s active line to sell: “If fashion isn’t there, nothing else is going to matter. The most important feature is how the total line hangs when it is shown to buyers.’

Under the Reebok banner, the company produces two distinct lines, Reebok Sport, a sportswear weekend line with an emphasis on fashion, and Reebok, which is a true performance line sold exclusively in sporting goods shops such as Herman’s. Reebok Sport is sold in department stores (60 percent) and specialty shops (40 percent).

New for fall 1988 will be a line of apparel designed for walking that will complement Reebok’s walking shoes, which made their debut in stores this fall. “This group will be a more sophisticated, casual lifestyle approach moving into the contemporary vein,’ Arbetman said from Reebok’s headquarters in Canton, Mass.

Colors, too, will be more sophisticated than the ones used in the Reebok Sport collection, which are primarily pastels, he said. Wholesale prices range from $30 for walking shorts to $40 for a top.

Separate sales forces, designers and merchandisers are used for the Reebok and Sport divisions. This arrangement has its advantages, since the “designers are not influenced by each others’ markets but by what their specific market dictates,’ Arbetman explained.

The turning point in functional to fashion activewear, Arbetman continued, came with the growth of interest in health, fitness and aerobics –activities where fashion and fit are paramount. Now, some of the apparel–such as tights–even has a unisex appeal. “There is a fine line between true performance and weekend wear,’ he noted.

“Today’s customer is looking for a good fit and the best fabrics and quality workmanship,’ he continued. For instance, in the firm’s competitive line, he said its french terry cloth pieces are very durable and can look great after many washings.

But unlike the variety of fabrics that are acceptable in today’s active lines, Arbetman recalls a time– “five years ago’–when he was a buyer for the J.W. Robinson department store chain, when “everything in active apparel was made of velour.’ No matter who was making them “there was nothing else in department stores but velour warmups.’ Now he believes any fabric is appropriate as long as it meets the performance or sportswear requirements of the wearer.

Adidas is scrambling these days. The American division of the giant West German-based activewear firm, left behind in the fashion explosion, is pulling out all stops in an effort to switch its utilitarian and functional image to one that also reflects an updated posture.

Despite the prominence Adidas claims in functional wear, Joe Kiener, chief executive officer and president of Adidas USA, admitted that the company “had been missing out on a number of major trends that created major new businesses,’ such as aerobics and workout wear.

Fashion, too, and the growing importance of the female market were not being recognized. However, the company is making a belated rally to capture lost ground by addressing these areas without severing the core part of its business– “our roots,’ Kiener said–which is function.

Joseph S. Kirchner, general manager and executive vice president of marketing and sales, said, “Three or four years ago, all of the women’s apparel lines made for Adidas USA were simply a recolored version of the men’s line. The same fabrics, styling and designs were used. The only difference besides the color was that the apparel was made in a women’s pattern.’

Around the same time the design team was continuing in this direction, it became apparent that “we were going nowhere with this approach,’ Kirchner said. “We then rebuilt a completely separate and distinct department of merchandisers, product managers and fabric researchers’ to handle only the women’s area.

A lifestyle active sportswear element was added shortly after. It covered the running, tennis and fitness spectrum but also translated into more leisurely attire for not-so-active pursuits.

Although Adidas, like other activewear firms, has embraced the concept of branching into sportswear, it is looked at as a niche business, an addendum to its active lifestyle line.

“We want to cover participant sports like tennis and running and also go into active offerings worn by the consumer for weekend activities as well,’ Kirchner said from the firm’s new U.S. division headquarters in Warren, N.J. The company produces separate collections for fitness, warmups, tennis, fleecewear and all-purpose activities.

He added that Adidas doesn’t compare itself with sportswear companies like Esprit, a trendy junior resource, or firms of a similar ilk that produce more than the four lines Adidas does each year. Because of this, Adidas merchandise has a longer life cycle and reaction time than sportswear companies that produce six, seven or even eight collections each year.

Sixty percent of the firm’s line is produced in the Orient and South America; the rest in made in the United States. Kirchner said its women’s, men’s and children’s product lines are distributed to almost 7,000 department store and specialty accounts. The latter group includes a broad base in better-price sporting goods stores like Herman’s.

While fashion may be driving today’s active business, Kirchner believes the element of authenticity, which is Adidas’s hallmark, lends the label its credibility. “There are many new companies that appear on the scene each season and then disappear,’ he said. “Because of our authenticity and our experience in participant and active sports, we know what our female customer wants when she plays sports, and we added this experience to our lifestyle approach.’

Kirchner and Kiener plan to hone merchandising strategy further with the separation of various divisions. “We have different sales forces to work on apparel and footwear,’ Kirchner said. “They even call on different people.’ This segregation –the groups have separate office spaces–will be complete within the next 12 months, with the ultimate goal being a vertically aligned marketing concept from product conception to distribution. “We have people thinking, eating and living the ladies’ business,’ Kirchner insisted. “They no longer make it just a part of their duties.’

Women’s apparel sales may be creeping up the volume ladder, but it is the men’s area that continues to set the pace. The emphasis now in the women’s business is one of fashion dominance. “If you turn out fleece today, it has to have a fashion feature,’ Kirchner maintained. “Just to turn out a crewneck and sweat pants doesn’t do it anymore.’

It is this product innovation that Kirchner, the former vice president and general manager of the Adidas USA textile division, called the key to maintaining market share in the competitive and often volatile active environment.

“We cannot sit back and be content with what we have achieved,’ he said. “Our product people go to Europe and Japan, as well as shopping boutiques for ideas and trends. These may hit our industry one or two seasons later but we still have to keep on top of what’s going on.’

Because there’s been a leveling off in the number of women playing tennis and running, Kirchner said, more attention is being placed on the fitness movement with apparel made for aerobics and gym workouts, as well as lifestyle thematic clothing. He added, “We are always looking at marginal trends such as biking, which to us is the most interesting.’

Adidas was founded by Adi Dassler in 1948. Before then–since 1929 –the company made athletic shoes that were used for a variety of sporting events, including Olympic competitions. It wasn’t until the late Sixties that the company entered the men’s apparel business and several years later started making a women’s line.

With 12,000 employees world-wide –1,000 of them working for the U.S. division alone–Adidas is governed by a management board where half the members are family.

The revival of strength in the footwear business at Nike–primarily with the Nike Air running shoes –is rubbing off on its active sportswear area as well, observed Drexel Burnham Lambert’s Lanzet.

Marilyn Tam, vice president of Nike Sport, concurs with this assessment: “There is a coordinated effort between the Air products and apparel, a sort of synergy involved. Also, we respond to customer needs in apparel just like we do in footwear.’

“I think for both Reebok and Nike, apparel has been a strong area,’ Lanzet continued. “Nike has redesigned its apparel lines in terms of esthetics, and they look extremely good. The Nike brand once again offers excitement at retail.’

He explained that over the past few years Nike “wasn’t doing much in footwear and its apparel lines weren’t exactly blockbusters either.’ But with this year’s redesign effort, helped by the Nike Air shoe line, business has become more upbeat overall, Lanzet said.

Several years ago, Nike experienced two consecutive quarters of loss, said Kevin Brown, a spokesman for the company, after Reebok made the move from active to street with its soft white leather shoe.

This innovation proceeded to capture market share and left the Beaverton, Ore.-based firm with an inventory of 22 million primarily low-end jogging shoes aimed at mass merchandisers. These shoes went nowhere, and Nike has since discontinued selling its shoes to the hardcore volume industry.

But with the launch of last year’s slick promotional campaign reviving its 10-year-old Air line and emphasizing fashion as well as function in its women’s apparel, the company is again back in step with market needs.

The women’s division comprises lines for running; basic before and after-workout sportswear looks; fitness; tennis, and unisex golf attire. But it wasn’t until about four years ago that the company gegan to “understand the importance of fashion on athletic wear, and we didn’t have anyone merchandising that side of the business until Marilyn (Tam) joined us six months ago,’ Brown said.

Women’s active apparel had been the “ultimate of utility,’ with scant offerings that in the late Seventies consisted of little more than a T-shirt, running shorts and socks, according to Brown. But as women wore their Nike running outfits for activities other than running, it became apparent that this look had a purpose beyond tracks and macadam roadways, he indicated. Along the way, “we became more cognizant of color and started to use things that would be received better in the market, such as textured fabrics for a complete fashion and function look,’ Tam noted.

The fashion evolution at Nike, which went public in December 1980, was slow to take hold, though, with the company steadfastly holding onto its nuts-and-bolts image as a true function house. Now, however, with the “whole fashion aspect there is more of an awareness and need’ for this type of apparel in the company’s target markets, Tam said. But she was quick to reassure the sporting purists that “whatever we put out, the customer can be assured that function will always be there as well as the fashion element.’

Fitness-related attire is the biggest segment in women’s apparel, and walking wear is also doing well, Tam and Brown acknowledged. Another area, cross training, is a major direction and gives the firm an opportunity to implement further its fashion strategies, as well as tieing in with its cross-training shoes, part of the Air line, which made its debut last year.

Some top names in authentic activewear are going after the department store and apparel specialty store market with separate collections or packages with more of a lifestyle approach. Whether or not they have made a formal division between authentic and unauthentic classifications, activewear manufacturers in general say they are paying more attention to the women’s end of their business.

The trend reflects the inclination of the stores to move their activewear departments away from the authentic mode of the sporting goods retailer. Of course, the manufacturers are continuing to cater to sporting goods specialists with authentic activewear.

Reebok International is a major name breaking into dual distribution with its fall products. It is launching a collection for fall called Reebok Sport, which is a more contemporary weekend apparel line aimed at department and specialty stores, said Doug Arbetman, president of Reebok Apparel. It is also offering true performance Reebock apparel, which is aimed at athletic store specialists.

Arbetman said Reebok Sport uses bright colors in such items as French terry sweatshirts, sweater knits and fleece and sweater knit combinations. For fall, the average wholesale price is about $20.

Among the key looks are shoulder-padded mock turtlenecks with zippers; cardigans; pants with color-tipping, and even leather jackets, wholesaling for $92.50, said Arbetman. The entire line will carry the Reebok Sport logo.

The authentic Reebok line includes T-shirts, wholesaling from $7 to $10; fleece tops at $15; fleece sets from $25 to $55, and bottoms from $25 to $30. This collection includes items for activities such as aerobics and jogging, and has a separate sales force, said Arbetman.

The company plans to do 50 percent of its activewear business with the Reebok line for sporting goods specialists, Arbetman said, and 50 percent with Reebok Sport for department and specialty stores.

He said all Reebock apparel lines should garner $16 million in wholesale volume. Half the sales are expected to come from the women’s area. Reebok International recently agreed to acquire Avia Group International, which will operate as an autonomous subsidiary.

Recognizing the dual marketplace, Le Coq Sportif has created a separate sportswear design team to address the women’s market, said Pete Mahmet, president. He said the business had been just classifications, but is growing into a collection business. “They’re not just buying one warmup in 10 colors,” he said. Mahmet said he has created a whole package of tennis and golf apparel, which is being called La Vie Sportif. These products include tops and bottoms, wholesaling from $19 to $22.50; sweaters, wholesaling at $30, and jackets and pants, wholesaling at $24. “It’s going to department stores,” said Mahmet.

Meanwhile, a new subbrand for the firm is Cross Training, which Le Coq Sportif will identify with the logo, X Training. The brand includes apparel used for various exercises, such as aerobics, stationary bicycling and running on treadmills. This group consists of tight-fitting Lycra spandex bottoms with coordinating T-shirts with an X on them, representing “blood, sweat and tears,” said Mahmet. “It’s a neat graffiti look,” he said, and the pieces can be intermingled for various activities. Another subbrand is for cycling.

Mahmet said women’s apparel had accounted for 40 percent of the business, but is moving closer to 50 percent. “By the end of 1987 it should be 60 percent women’s and 40 percent men’s,” he said. “The women’s business is faster turning, and the buyers make decisions faster.

“We’re looking for a 28 percent increase for transition, because of X Training and Cycling,” said Mahmet. Transition is shipped May 15, and consists of the summer and fall lines together.

At Nike, 50 percent of the women’s business is aimed at the authentic exercise market and the remainder is spectator merchandise, said Leslie Grant, women’s marketing manager. She said the spectator pieces are generally sold to department and specialty stores. The authentic workout clothes generally go to sporting goods specialists.

Grant said one feature of the women’s line is component packages that give the feeling of “authenticity.” The packages consist of apparel a woman can wear to work out and then wear after the workout. For fall, the line, which carries a patch label reading Nike, includes a French terry group of pullovers and terry pants. Twenty percent of Nike’s business comes from women’s apparel, “but it’s growing,” said Grant. She said the company redirected its line this spring, and for the first time started aiming part of its advertising at women.

“Cross-training is the buzz word,” she noted, adding, “Women are aerobicizing, working with weights and riding the bicycles and they want pieces that can work for a variety of activities. It’s a real plus for us.” The cross-training group includes tights for jogging or gym work and bicycle shorts.

Adidas plans to do 30 percent of its business with department stores, said Joseph Kirchner, vice president and general manager. He said he offers one line that is built for different customers. A good part of the line is authentic, designed for running and tennis, and other sports themes are field hockey and rowing. In spectator apparel, fleece separates is the buzz word, he said. Items with embroidery, printing and the Adidas logo are being offered. An extended wovens offering, including textured warmup suits, also is important.

Recently back home to Toronto to put in a personal appearance at the Little Lanes in Hazelton Lanes, New York-based jewelry designer Marla Buck proved herself the possessor of pronounced style, both comedic and precise. In her vocabulary, the word fun turns out to be an adjective. It amuses her, for example, to think of making a dress out of a huge label: “Sarong it. It would be very fun.” Talking about attending the Jean-Paul Gaultier party in Manhattan a few months ago, she speaks of having been “dressed to the max,” wearing “all these new toys” she’d bought in Europe.

That was “funnest.” For her in-store appearance, Buck is dressed in what she calls “head- to-toe conservative gear”: navy cardigan and pleated skirt, white blouse, attributable to Claude Montana, Pinky and Dianne. She is also wearing shoes with high heels, very high. “At least 700 inches,” she estimates. For jewelry, she sports a variety of pieces from her collections, current and vintage. The large ring of white metal and glass is one of the first pieces she ever did. The big stamped-brass brooch, in the shape of a bird bearing a burning ball, is one of the latest. She is not wearing earrings; she used to, for interviews, but now she finds them aging.

A Manhattan resident for seven years, Buck was born in Toronto in 1956 and says she already feels old. In fact, having been a professional dancer, she turned to jewelry design when she turned 25. “I didn’t want to be nowhere at age 30, and I had an interest.” Having formed her own company in 1982 and with business now so successful that she can say that, “Last month I did as much as I did last year,” Buck grows appreciative when she tells of being 3 years old and playing with a box of junk jewelry that one day, she imagined, she would wear to balls. Her mother, “just a wild lady,” always had a lot of unusual jewelry and her stylish example was further inspiration to Buck. Her father, “a very straight businessman,” does not wear jewelry. “Thank goodness.” While obviously having reservations about the very idea of male jewelry, Buck, with acute timing, has for spring completed her first collection for men. “Jewelry for men is a very delicate subject, because we don’t promote the pinky ring, the gold chain, the gold bracelet. I think that’s hideous. What started it was that I think there’s a lot of androgyny available for women, and there’s no androgyny available for men. You’re either straight or you’re gay or – I just don’t think there’s any in-between ground.”

In London, she finds, things are different. “London is like a picnic. The straight men wear makeup, wear skirts, wear pearl pins with diamonds. There’s no connection between what they’re wearing and who they are, and it’s wonderful. I’m not saying I want men to wear makeup – I don’t know if I’m ready for that either – but I think there’s a way that a man can distinguish himself.” Although an exponent of false stones and non-precious materials in her women’s collections, Buck has fashioned the 30 pieces in her men’s collection from sterling silver and l4-karat gold. “It seems that once a man becomes convinced of the purchase, he wants it to be a true purchase.” Convinced that any male customer who wants something really flamboyant can find it in her women’s line, Buck has chosen not to follow London’s bold lead but has designed the men’s collection with Wall Street in mind. “I’m working from bland on. . . . I really want to get the men educated, and you have to start in grade one.” The tie clips, lapel pins, and cufflinks (bound, with all of spring’s emphasis on shirts, to be a hot accessory) feature images that Buck calls “boy’s story items . . . a lot of cowboys, firemen, all the things he wanted to be when he grew up.” Thus, there are tie clips in the shapes of racing flags and tennis rackets, lapel pins in the shape of bowling pins and propellers. So far, there are no snips, snails or puppy dogs’ tails, but, given Buck’s snazzy imagination, there might have been.